For the record, the FTC’s case was a true abomination. That was hugely important because it signaled that if there is no overlap, deals will get done. I don’t know if anyone noticed that after the stunning rebuke of the Federal Trade Commission's fight to block Microsoft's (MSFT) merger with Activision Blizzard (ATVI), regulators backed down from challenging the proposed deal between Amgen (AMGN) and Horizon Therapeutics (HZNP). We potentially have a new winner: takeovers. A better IPO market could actually ignite the group. There could be one last gasp of last-war-fighting that will play into the hands of the largest, best-capitalized banks. The most important sector might be the totally moribund financials. Consider what happened with off-cycle reporter Lululemon (LULU)? You might see a lot more of those. You can pick companies now that may have good quarters and really see things rip. What happens if we get through the gauntlet intact? What makes me more bullish than any time in months is that the bearishness has only increased and the market lacks champions other than the usual gang who have distinguished themselves but have few disciples. But it can't be ruled out, especially if Fain just picks Stellantis (STLA) because it is the most out to lunch. The latter seems almost ludicrous with Trotskyite Shawn Fain at the helm of the UAW - hey, Russian revolutionary Leon Trotsky wanted the workers to own the means of production and Fain seems to agree. Add a decent initial public offering from Softbank's Arm Holdings and no strike from the United Auto Workers and we've run the gauntlet. We’ve had two good months of readings. If we get a third, I predict the Fed goes for the jugular by giving us two more quarter-point hikes and then declares a sotto voce victory. The consumer price index, which gets reported on Wednesday, must grind to 2% from 3% and stay there. We saw a similar move from June 1986 to July 1987, and most recently from October of 1998 to January of 2000. The S & P went rose from November 1982 to August of 1984 when the 30-year Treasury jumped to 12.8% from 10.4%. And we have had some tremendous bull markets take off from these rate levels, ones that, alas, didn’t need further tightenings by the Federal Reserve. We are putting the era of tepid demand and artificially low rates behind us and the consequence is a natural flow of funds. Under what scenario is that bullish? How about a historical one. And we just might have a healthy economy. That may sound odd, but a healthy economy brings a demand for money. I don’t care at this point if we get a few more interest rate hikes, so long as the move is done slowly over time.
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We will soon see the demise of the inverted yield curve, revealing all of the bears to be the financial equivalents of undrafted free agents and failed walk-ons.
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